This paper analyzes a spatial model of political competition between two policy-
motivated parties in hard times of crisis. Hard times are modeled in terms of policy-
making costs carried by a newly elected party. The results predict policy divergence in
equilibrium. If the ideological preferences of parties are quite diverse and extreme, there
is a unique equilibrium in which the parties announce symmetric platforms and each party
wins with probability one half. If one party is extreme while the other is more moderate,
there is a unique equilibrium in which the parties announce asymmetric platforms. If
the preferred policies of the parties are not very distinct, there are two equilibria with
asymmetric platforms. An important property of equilibrium with asymmetric platforms
is that a winning party necessarily announces its most preferred policy as a platform.
JEL classification: D72.
Keywords: Spatial model; Political competition; Two-party system; Policy-motivated
parties; Hard times; Crisis.